Debunking 3 Myths About Gold Coin Investments
Investing in gold has been a time-tested strategy for preserving wealth and diversifying portfolios. Gold coins hold a special appeal for many investors. However, like any investment, gold coins are surrounded by myths that may deter potential investors.
In this blog, let’s debunk three common myths about gold coin investments to help you make informed decisions.
Myth1: Gold Coins Aren’t a Practical Investment
One of the prevailing myths about physical gold coins is that they are impractical compared to other forms of gold investments. Contrary to this belief, gold coins can be a highly practical and tangible investment. Unlike paper assets designed to replicate gold, gold coins offer intrinsic value and aren’t subject to the same risks of default. Physical gold carries no counterparty risk. You can take physical delivery. Gold is easy to store and transport. Gold is easy to purchase and sell. Gold is liquid.
Myth2: Gold Coins Have High Premiums and Low Returns
Another common myth surrounding gold coin investments is that they are expensive to purchase and offer low returns. The premium on a gold coin refers to the additional cost above the spot price of gold, which supposedly eats into potential profits.
The premium on gold coins can vary depending on factors like the coin’s rarity, historical significance, and condition. Premiums on gold coins can remain competitive by purchasing from a reputable dealer. If a coin carries a premium at purchase, it could likely offer a premium at liquidation. In fact, certain coins that carry a premium at purchase can offer a higher percentage return at liquidation due to supply and demand factors.
Regarding returns, gold coin investments have demonstrated stable and reliable growth over the long term. While short-term price fluctuations are possible, gold has shown resilience during economic downturns and has acted as a hedge against inflation and currency devaluation. Investors should view gold coin ownership as a long-term strategy for wealth preservation rather than a get-rich-quick scheme.
Myth3: Gold Coin Investments Are Only for Collectors
A myth circulating among potential investors is that gold coin purchases are primarily for collectors or survivalists rather than serious investors. However, this is far from the truth. Investors interested in utilizing gold coins as a hedge can focus on investing in sovereign mint and legal tender coins, which are liquid worldwide and have stood the test of time as a reliable asset class to diversify and hedge with.
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